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Millions to lose out as benefits are curbed

Chantal Chaervey with her son Harry will lose about £150 a yearJohn Ferguson

Millions of benefit claimants are about to lose nearly £1 billion of increases planned for next year after the Government decided to break the historic link between inflation and welfare payments.

The Times has learnt that key ministers, including Iain Duncan Smith, the Work and Pensions Secretary, have agreed that 5.7 million people claiming benefits for the unemployed will each lose hundreds of pounds a year.

The savings are likely to go towards the Government’s ambition to scrap the planned 3p-a-litre rise in petrol in January, which would cost £1.5 billion. George Osborne, the Chancellor, is anxious to keep to his deficit reduction plan and is said to be putting further pressure on Mr Duncan Smith’s £200 billion welfare budget.